US passes bill aimed at climate, inflation
Senate Democrats approve sweeping $1.2 trillion budget measures by one vote
Democrats pushed their election-year economic package to Senate passage yesterday, a hard-fought compromise less ambitious than United States President Joe Biden’s original domestic vision but one that still meets deep-rooted party goals of slowing global warming, moderating pharmaceutical costs and taxing immense corporations.
The estimated US$740 billion ($1.19 trillion) package heads next to the House, where lawmakers are poised to deliver on Biden’s priorities, a stunning turnaround of what had seemed a lost and doomed effort. Cheers broke out as Senate Democrats held united, 51-50, with Vicepresident Kamala Harris casting the tie-breaking vote.
“Today, Senate Democrats sided with American families over special interests,” Biden said in a statement from Rehoboth Beach, Delaware. “I ran for President promising to make government work for working families again, and that is what this bill does — period.”
Speaker Nancy Pelosi said her chamber would “move swiftly to send this bill to the president’s desk”. House votes are expected on Saturday.
“It’s been a long, tough and winding road, but at last, at last we have arrived,” said Senate Majority Leader Chuck Schumer, ahead of final votes.
“The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative feats of the 21st century,” he said.
Senators engaged in a round-theclock marathon of voting that began on Sunday and stretched into the next day. Democrats swatted down some three dozen Republican amendments designed to torpedo the legislation. Confronting unanimous Republican opposition, Democratic unity in the 50:50 chamber held, keeping the party on track for a morale-boosting victory three months from elections when congressional control is at stake.
The bill ran into trouble midday over objections to the new 15 per cent corporate minimum tax that private equity firms and other industries disliked, forcing last-minute changes.
Despite the momentary setback, the “Inflation Reduction Act” gives Democrats a campaign-season showcase for action on coveted goals. It includes the largest-ever federal effort on climate change — close to US$400B — caps outof-pocket drug costs for seniors on Medicare to US$2000 a year and extends expiring subsidies that help 13 million people afford health insurance. By raising corporate taxes and reaping savings from the long-sought goal of allowing the government to negotiate drug prices for Medicare, the whole package is paid for, with about US$300B extra revenue for deficit reduction.
Barely more than one-tenth the size of Biden’s initial 10-year, US$3.5T Build Back Better initiative, the new package abandons earlier proposals for universal preschool, paid family leave and expanded child care aid. That plan collapsed after Democratic Senator Joe Manchin opposed it, saying it was too costly and would fuel inflation.
Nonpartisan analysts have said the 755-page “Inflation Reduction Act” would have a minor effect on surging consumer prices.
Republicans said the bill’s business taxes would hurt job creation and force prices skyward, making it harder for people to cope with the nation’s worst inflation since the 1980s.
The measure’s final costs were being recalculated to reflect late changes, but overall it would raise more than US$700B over a decade. The money would come from a 15 per cent minimum tax on a handful of corporations with yearly profits above US$1B, a 1 per cent tax on companies that repurchase their own stock, bolstered IRS tax collections and government savings from lower drug costs.
Democratic Senator Kyrsten Sinema forced Democrats to drop a plan to prevent wealthy hedge fund managers from paying less than individual income tax rates for their earnings. She also joined with other Western senators to win US$4B to combat the region’s drought.
Several Democratic senators joined the Republican-led effort to exclude some firms from the new corporate minimum tax.
The package keeps to Biden’s pledge not to raise taxes on those earning less than US$400,000 a year.
It was on the energy and environment side that compromise was most evident between progressives and Manchin, a champion of fossil fuels and his state’s coal industry.
Clean energy would be fostered with tax credits for buying electric vehicles and manufacturing solar panels and wind turbines.
There would be home energy rebates, funds for constructing factories building clean energy technology and money to promote climatefriendly farm practices and reduce pollution in minority communities.
Manchin won billions to help power plants lower carbon emissions plus language requiring more government auctions for oil drilling on federal land and waters. Party leaders also promised to push separate legislation this northern autumn to accelerate
permits for energy projects, which Manchin wants to include a nearly completed natural gas pipeline in his state. Still, environmental groups hailed the passage as a milestone. “Tremendous progress,” said Manish Bapna, president and CEO of the Natural Resources Defence
Council, in a statement. —AP